HRA Exemption: How It's Calculated (with Examples)
Updated for FY 2025-26 · Old regime only
House Rent Allowance (HRA) is often the single largest deduction for salaried renters — but only in the Old regime. The New regime does not allow it. Here is exactly how the exemption is worked out.
The least-of-three rule
Your HRA exemption is the lowest of these three amounts:
- Actual HRA received from your employer.
- Rent paid − 10% of basic salary.
- 50% of basic salary if you live in a metro city (Delhi, Mumbai, Kolkata, Chennai), or 40% for a non-metro city.
"Basic salary" here means basic pay plus dearness allowance (if applicable).
Worked example (metro)
Basic salary ₹6,00,000 · HRA received ₹2,40,000 · Annual rent ₹3,00,000 · Mumbai (metro):
- Actual HRA = ₹2,40,000
- Rent − 10% of basic = ₹3,00,000 − ₹60,000 = ₹2,40,000
- 50% of basic = ₹3,00,000
The least is ₹2,40,000 — that's your HRA exemption.
Our calculator computes your HRA exemption automatically.
Try it with your numbers →Documents you should keep
- Rent receipts (and a rent agreement).
- Your landlord's PAN if annual rent exceeds ₹1,00,000.
- Proof of payment (bank transfers are best).
Common questions
No HRA component in salary? You may still claim rent under Section 80GG (with separate limits).
Paying rent to parents? Allowed, if it is genuine — they must declare it as income and you should keep proof.
On the New regime? HRA exemption is not available — so if your HRA is large, the Old regime may save you more. Compare both.